NET EARNINGS IN DISTRICT I 339 
ter—the dots, of course, are all above the line; that is, in the area 
of increasing net earnings ratios. It is of interest to observe, 
however, that the dots tend to be distributed over a wider range 
vertically than horizontally, this fact indicating that the increases 
in net earnings ratios are generally more dependent upon changes 
in the gross earnings ratios than upon those of total expense. A 
similar distribution of the dots in the lower left-hand quarter 
obtains. The banks here represented had decreasing ratios of 
net earnings, inasmuch as gross earnings ratios were decreasing 
and ratios of total expense were increasing. The alignment, how- 
ever, shows that the fall is primarily to be attributed to the de- 
creases in gross earnings ratios. 
When gross earnings and total expense ratios are both increas- 
ing, the dots are predominantly to the right of the area of no- 
change in net earnings; that is, net earnings ratios tended to 
increase, this condition being primarily due to the greater changes 
in gross earnings. On the other hand, when both ratios are de- 
creasing, a majority of the dots are to the left of the no-change 
area of net earnings; that is, net earnings ratios tended to de- 
crease, a condition brought about by relatively greater changes in 
gross earnings than in total expense ratios. 
If the net changes in net earnings ratios are determined when 
changes in the ratios in one series are paired with the positions 
in the other, relative to the 1924 average, the following results, 
under conditions making for increases and for decreases, respec- 
tively, in net earnings ratios, are obtained. 
ConDITIONS MAKING FOR INCREASES IN NET EARNINGS RATIOS 
Ratios 
Gross Earnings 
Total Expense 
Gross Earnings 
Total Expense 
Gross Earnings 
Total Expense 
Gross Earnings 
Total Expense 
Nature 
of 
Change 
ncreasing 
Decreasing 
‘ncreasing 
Decreasing 
(ncreasing 
Decreasing 
Increasing 
Decreasing, 
Position 
Above 
A hove 
ibove 
Above 
Below 
Below 
Below 
Below 
Ratios 
Total Expense 
(Gross Earnings 
Total Expense 
Gross Earnings 
Total Expense 
Gross Earnings 
Total Expense 
Gross Earnings 
Position 
Above 
Above | 
Below 
Relow 
Above 
Above 
Below | 
Relow 
Net Change 
in Net 
Farnings 
26 
4.10 
+.27 
+ +9* 
+ .41t 
+.20% 
+.37 
+.132 
*4For exclanation of these signs and amounts. see Appendix I, page 387. Cases 2 and 3, respectively.